Proposed Minimum Wage rates to deliver parity with Island’s Living Wage

Tynwald will be asked to approve increases to the Isle of Man’s Minimum Wage at the February sitting which, if approved, will see the rate achieve parity with the current Living Wage of £13.05 during 2025. 

The new rates, proposed by both the Department for Enterprise (The Department) and Treasury, will see the Island’s single hourly rate initially increase from £11.45 to £12.25 per hour from 1 April 2025, with a further increase to £13.05 per hour from 1 October 2025. The youth rate, for those over compulsory school leaving age but not yet 18, will increase from £8.75 to £9.55 from 1 April 2025, increasing up to £10.35 per hour from 1 October 2025.

The proposed two-part increase will align the Island’s Minimum Wage rate with the current Isle of Man Living Wage by October 2025. This move is in accordance with the current Tynwald policy position of achieving parity within five years, following the acceptance of a recommendation of the Tynwald Select Committee on Poverty in 2021. The phasing in of the proposed increases seeks to strike a balance between ensuring the Island remains an attractive place to live and work, prioritising fair wages whilst recognising the impact on some businesses in the economy and follows concerns expressed by the Minimum Wage Committee on a single increase in April 2025. 

Tim Johnston MHK, Minister for Enterprise commented: ‘In July 2021, Tynwald resolved that the Minimum Wage should reach parity with the Living Wage within five years. The current administration, through a commitment in the Island Plan, set the ambition of delivering on this Tynwald resolution by April 2025.  The Department, working closely with Treasury and the Council of Ministers, has sought to bring forward a pragmatic proposal which delivers the will of Tynwald but also seeks to provide a slightly longer lead in for businesses.

‘In addition, the overall increase ensures that the Isle of Man does not fall behind our close counterparts in the UK, Channel Islands and Ireland and is able to maintain a strong and competitive proposition when seeking to fill labour shortages and promote the Island as a secure, vibrant and sustainable place to live and work.’

The Enterprise Minister added: ‘We recognise that many businesses are navigating significant challenges and that these proposed increases may cause concern and have an impact on businesses, particularly small businesses, in our domestic economy. The hope is that the two-step increase will allow them more time to prepare and will also help those in our domestic economy trade through a valuable TT period before further wage increases arise. 

‘The Department offers a range of support Schemes for local businesses, including funding, training, and advisory services which can be accessed to support a range of initiatives including, importantly, measures which can improve productivity.  In addition, work is also underway to support the local economy through the Local Economy Strategy and additional business support schemes, which will go before Tynwald in January. I would encourage any business with concerns, or who wishes to find out more about potential support, to contact the Department directly, or through the relevant Executive Agency.’

Dr Alex Allinson MHK, Treasury Minister commented: ‘When Tynwald first resolved to deliver parity between the Minimum and Living Wage rates, clearly no one was aware of the significant challenges businesses would face, including the increased inflationary pressures driven by external events in recent years.

‘It is imperative however, that in order to move forward, we strike a balance between meeting the needs of our community and prioritising fair wages, whilst also supporting the financial stability of businesses to ensure our commitment of a sustainable and secure economy for the future.

‘I believe that the proposals deliver this balanced approach and would echo the comments of the Minister for Enterprise in encouraging businesses to explore the range of potential support available to them, should they have any concerns.’

The Department and Treasury have also agreed to undertake a review of the current process for determining proposals in respect of the Minimum Wage, consider the current statutory requirements prescribed in the Minimum Wage Act, the policy position of alignment with the Living Wage as well as exploring other options for future consideration. 

Currently the Island is unique in the way it calculates the Living Wage based on a basket of goods approach, with other comparable jurisdictions all taking an approach pegged to Median wages. The review will be informed by a consultation which was undertaken earlier in 2024, and learnings from the recent process in determining the current proposals.

The two sets of proposed increases will be brought forward to Tynwald at the February 2025 sitting and, subject to approval, the first round of increases will be effective from 1 April 2025, with the second set of increases effective from 1 October 2025.